Utah hospital lobby says 'no' to Medicaid expansion, for now
Health • Association says it doesn't exclude expansion, but favors "free-market" options.
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There was no fanfare, no public announcement — just a letter emailed to a select group of health industry leaders.

But the weight of the Utah Hospital Association's nonendorsement of the Medicaid expansion is the same.

There are few interest groups as powerful as the hospital lobby. And no entity has more at stake in this now-optional provision of the Affordable Care Act, which would provide health coverage to tens of thousands of working poor, uninsured Utahns.

"However, there are too many practical and political decisions to be made … to support the full Medicaid expansion at this time," states the association's Oct. 11 position statement, which cites as a chief concern "adverse impacts on the commercial insurance market."

It's a marked departure from the position of the American Hospital Association, which favors the expansion. But Utah Hospital Association President Rod Betit insists, "It's not a show-stopper."

Hospitals aren't against the expansion and haven't ruled it out as an option, Betit said. "We're in favor of a more thoughtful, graduated approach. We support finding a Utah solution that works for our state, focusing on a free market approach."

The association supports finding $37 million in state funding to cover 48,500 Utahns who are eligible for Medicaid now, but haven't enrolled. But there are alternatives to stretching the public safety net to cover the additional 58,000 who would qualify under the expansion, Betit said, including steering them into private health plans and giving them federal tax credits to make them affordable.

To expand Medicaid or not is one of the most politically fraught decisions facing states in the wake of the U.S. Supreme Court's ruling on the Affordable Care Act. The high court upheld the law, but said the U.S. government can't withhold existing Medicaid funding from states that decline to broaden their rules for who is eligible.

President Barack Obama's election to a second term leaves little doubt about the future of health reform. Politicians on both sides of the aisle viewed the election as a referendum on whether the law should stand.

But Republicans still have a lock on Utah. The question now is how much wiggle room the Obama administration will give red states in implementing the law.

Answers from U.S. health and human services officials are expected in the coming weeks, said Judi Hilman, executive director of the Utah Health Policy Project. She suspects they'll lean heavily on data from the Congressional Budget Office that points to Medicaid as the most cost-effective way to cover the working poor.

"Before anyone rejects the Medicaid expansion or asks for flexibility, we do best to look at offers of coverage at that income level: The offers just aren't there," Hilman said, referring to the dearth of employers offering health benefits to low-wage workers.

Matthew Slonaker, Medicaid policy analyst at the Health Policy Project, said expanding the safety net fits with hospitals' mission to care for "our most vulnerable neighbors," and it will help them get paid for care they now deliver on a charity basis.

Hospitals argue it's more complicated than that.

University of Utah Health Care received $62 million from Medicaid in fiscal year 2012, said spokesman Christopher Nelson. That's a tidy sum, but less than 7 percent of the health center's total revenue, he said, explaining that while commercial insurers pay 60 cents to 70 cents for every dollar billed, Medicaid pays about 31 cents.

At the for-profit MountainStar chain, owner of St. Mark's Hospital, Medicaid accounts for 6.5 percent of the revenue and 13.2 percent of patient admissions — not enough to cover the cost of those patients, said spokeswoman Audrey Glasby.

Utah health giant Intermountain Healthcare draws more, about 11.6 percent, of its revenue from Medicaid. At Primary Children's Medical Center, the figure is close to 30 percent, according to spokesman Daron Cowley.

The expansion largely benefits adults and won't affect Primary Children's much. And it could hurt Intermountain's insurance arm, SelectHealth, by disrupting the insurance market.

Caring for underfunded Medicaid patients could result in hospitals shifting costs to privately insured customers, said Betit. That, in turn, could lead to insurance price hikes and erosion in employer-based coverage, as cash-strapped employers drop their health benefits, he said. Expanding Medicaid

• Utah has one of the leanest Medicaid programs in the U.S. It's hard to qualify unless you're disabled, pregnant, a child or an extremely impoverished parent. Adults without kids, no matter how poor, do not qualify.

• The federal health law aims to change that by expanding Medicaid to cover everyone who earns up to 138 percent of poverty-level income.